When announcing the three agenda items for July’s solo board meeting, Chairman Hauptman closed with this affirmation: As always our mission is to protect the safety and soundness of the credit union system and we are best equipped to do this when we understand how credit unions interact with new technology and products.”
While “new technology and products” may make interesting topics, the key to knowing if the agency is best equipped would be updates on the following issues:
- What is the status of the staff downsizing? The final number of departures? Who fills the primary roles in the Chairman’s office and in agency critical responsibilities? What are the top priorities? What organizational changes have been made?
- What is the status of the examination cycle? How many credit unions will receive an annual exam? How many will be deferred? Exams are the primary tool that protects the safety and soundness of the system.
- Chairman Hauptmann expressed concern about increased credit risk. The first quarter data suggested improvement in most areas of financial performance. Can the E&I staff update the industry with specific trends or examples that the industry should be aware of?
This update would also be an opportunity to discuss the recent increase in liquidations including the abrupt closure of Unilever FCU on April 30. Why is this occurring versus mergers or workouts?
- In the area of supervision policy, it would be helpful for updates from Regional Directors about their process for approving, or not approving, credit union purchases of banks. Several announcements of “definitive acquisition agreements” have been made by credit unions, only to have the initiative quietly dropped months later. See Sabine Bank and TDECU’s announcement in June. What are the criteria that credit unions must meet for purchase of a bank?
The Announced Agenda for Thursday’s Meeting
The NCUA’s three topics are briefings on the Central Liquidity Fund, NCUA’s Ombudsman, and artificial intelligence. The first two would seem to be remote from any current issues.
The CLF has not made a loan since 2009. In the liquidity challenges caused by the Fed rate runup in 2023-2024, all credit union borrowing went elsewhere. The CLF continues to pay a below market rate to shareholders and to add to its retained earnings even though it has no risk.
The key to any future role is not a change by Congressional legislation (a repeated board excuse for inactivity) but rather the CLF’s willingness to work with its credit union shareholders on projects for member benefit.
As for the ombudsman briefing, I don’t recall this ever being a board agenda item. Is this just to demonstrate an activity that DOGE missed?
Artificial Intelligence is a wide open topic. Many credit unions are using bots for chat. Some are using AI applications for internal edits and communication efficiency. Several credit unions have announced investments in fintech AI initiatives.
It might be helpful to know how NCUA has used AI with specific cases and its effectiveness. If the board topic is just a general presentation, that approach can be found at any credit union conference today by experts in the field.
The Role of Board Meetings
Public NCUA board meetings are an opportunity for accountability, agency management priorities and presenting a vision for how the agency and credit unions can work together.
It feels somewhat incongruous for a single chair, who is supposed to be overseeing the staff, to lead a dialogue to present different ways of thinking on topics that would arise from a full board.
In this time of government downsizing, unresolved NCUA Board status, and continuing economic uncertainty, a dialogue on the state of the Agency would be helpful and encouraging.
Will these topics meet that goal? If the meeting falls short of this task, it might be helpful to ask credit unions about their issues for future meetings.
The Chairman recently took this approach on crypto custody via LinkedIn post. It might be a way to stay relevant and supportive in NCUA’s mission of protecting credit union safety and soundness.